MYTH #1: Gold is a good hedge against inflation.

Inflation is a common reason cited to own gold. First, a very literal look. This graph shows spot gold prices against the U.S. consumer price index, a common measure of inflation. The red line is a regression that projects the implied price of gold were it determined by the CPI. It shows a mild positive relationship, but also that gold is volatile, does a bad job of tracking the CPI, and is wildly expensive compared to its utility as a hedge. The current price implied by the CPI is $780.

MYTH #2: Gold is a good currency hedge.

MYTH #3: Gold is an alternative to low real returns.

Claude Erb and Campbell Harvey argue that this is a classic case of spurious correlation. One could argue that low yields cause high gold prices and vice versa. It is additionally possible that low yields and high gold prices are both driven by the some common external force, like fears of hyperinflation.

MYTH #5: There is already a de-facto gold standard

Gold prices have little to do with either the U.S. monetary base, or its official holdings of gold. Official government holdings of gold have remained nearly constant in spite of the expansion of the Federal Reserve's balance sheet.